Working With Contractors
By Peter Vekselman
The author has permitted the reprinting and redistribution of this
article.
If you’re in the process of overseeing your first property
renovation you’re in for a real treat as you get a crash
course in working with contractors. While most are professionals who
are dedicated to doing the best possible job for you, there are some
prima donnas out there waiting to take advantage of your
naiveté. Here are some steps you can take before you hire a
contractor to ensure that your first contractor experience is a
positive one.
Have prospective contractors fill out an application – It may
seem silly, but by having a prospective contractor take the extra step
of getting an application and filling it out, you can assess how
serious that contractor is in working for you. If they won’t
take the time to fill out an application in order to win a bid, what
makes you think they’ll take the time to follow up with more
important details – like showing up at the worksite
Get references and check them – Your contractor will probably
offer to provide you with references when they bid on your rehab
project. Most will have good references, but you need to know as much
as possible about a contractor’s work ethic before you sign
on the dotted line and commit to spending several thousand dollars on a
project. When you call their references ask specific, pointed questions
about the quality of their work. If they have a tendency to not show up
for work, or worse – disappear in the afternoon, it can
significantly impact the profitability of your project.
Get all bids in writing – I know you’d like to be
able to do business with someone based on a handshake and a smile, but
the reality is that memories fade and a good faith agreement can be
misinterpreted by you or the contractor. A contractor is only human,
and by taking the time to get all agreements in writing,
you’ll have clarity in the event that a disagreement crops up
later.
Work with licensed and insured contractors – Licenses and
insurance are common business expenses, but too many contractors are
running around without the necessary licenses and insurance. You may be
provided with license numbers and promises that they have insurance,
but I highly recommend that you take what you’re told with a
grain of salt. As the owner of a property, you are ultimately
responsible in the event that there is an accident or a fire. Make sure
that their insurance information is accurate – and that their
coverage is in force before letting them begin a job.
Visit one of their worksites – Wouldn’t it be nice
if you could somehow magically know ahead of time what the quality of
your contractor’s work will be Fortunately, by visiting one
of their worksites you can gauge the quality of their work and see how
vigilant they are about keeping work areas clean. Before visiting one
of their worksites, make sure you have permission to go. Find out if
they’re the general contractor on the job or just a
sub-contractor.
Don’t pay them until the job is done – One of the
biggest perils you can face as a new real estate investor is that your
contractor doesn’t cause dramatic delays by failing to show
up for work when they say they will. Perhaps as problematic is the
contractor that will prematurely suck the funds out of a project and
then not want to complete the work. There’s really only one
way to prevent this from happening. Don’t release payment
until the job is done. You may be hit by pleas to release payment
early, but if you do there’s a strong likelihood that your
contractor won’t show up to finish your project. Imagine that
your contractor has already been paid for finishing your job. Then
after giving you a hard-luck story, you can’t depend upon him
to return to finish your job. This could put you in the position of
having to pay twice for the same job or having to postpone the process
of renting the property. Obviously, you’ll need to release
some money for materials or your project probably won’t get
started. Just be careful that you control the purse strings carefully.
I don’t want to give you the impression that most contractors
are lazy or unwilling to live up to their agreements, because
that’s simply not true. The vast majority of contractors are
as honest as the day is long, but by clearly defining expectations you
can stop problems before they come up. By doing this, you can ensure
that your interactions with your contractor is a positive one, and that
you’re just as happy when you part ways as you were when he
first waltzed into your life.
Peter Vekselman has been successfully investing in real estate since
1996. He has completed over 1000 real estate deals, owned a
construction company, been a private lender, and owned a property
management company. Peter currently works with clients all over the US
httpwww.CoachingByPeter.com .
If
you would like to take advantage of the market and learn how to invest
in real estate and you are local to the Dallas Fort Worth area, I know
a really great teacher and mentor here in Arlington Texas. Please take
a look at his web site: DennisJHenson.com,
Dennis has a great Mentoring and training program, I know because I am
one of his former students. I learned a lot from his one on one
teaching technique. - Michael Harman 817-457-7572
mchfun.business@gmail.com
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